On the first day of COP27 in 2022, Antonio Guterres, Secretary-General of the United Nations,
asked governments to tax the windfall profits of fossil fuel companies and redirect that money to
those in need and countries suffering loss and damage due to climate change impacts.2 Small
islands' leaders made a similar call, highlighting the enormous profits made by oil companies that
One year on, only some EU Member States, the UK, and a few Latin American countries, have
introduced some forms of temporary and often limited windfall taxes on fossil fuel companies,4
leaving colossal profits undertaxed – and climate action underfunded.
In July 2023, research by Oxfam and ActionAid revealed that 722 mega-corporations raked in over
US$1 trillion a year in windfall profits in 2021 and 2022. This research calculated that a windfall tax
of 90 percent on these windfall profits could generate US$941 billion – money that could increase
global investment in clean energy by a third.5
In this briefing we look specifically at the profits made by the largest fossil fuel and financial sector
companies in the 24 months leading up to June 2023, which is based on the latest available data.
We examine trends in their profits and the windfall tax revenue potential in the context of climate
change and the need to fund climate action. Energy companies, dominated by fossil fuel giants,
are a natural contributor to such a tax, in line with the Polluter Pays Principle. While financial
companies do not drill for oil and gas themselves, many of the largest ones have been big
financiers of fossil fuels extraction and use, gaining indirect profits from these activities. As
ActionAid research has found, banks alone poured over US$3.2 trillion into fossil fuels in the
Global South since the Paris Agreement was adopted in 2015,6 making them complicit in climate
Windfall taxes are taxes on profits that are considered to exceed expected profit rates and
result from external circumstances. Windfall taxes are usually introduced as one-off measures,
while excess profits taxes are a similar instrument built permanently into the tax system. There is a
growing consensus as to the general nature of excess profits and the need to tax them better.
There is a strong economic justice argument for taxing windfall profits (and broader excess profits)
in all sectors, as they could limit crisis profiteering as well as fund responses to crises. The fossil
fuel and financial sectors also make a particularly compelling case from a climate justice
perspective and to fund climate action.
Russia’s full-scale invasion of Ukraine in 2022 and the resulting hikes in energy product prices, as
well as the increase in interest rates in response to growing inflation in many countries, are often
mentioned as key respective drivers of energy and financial companies’ record profits in recent
years.7 The contrast between the astounding corporate profits and the hardships generated by
these events for ordinary people puts the incongruity of these profits into yet sharper focus. What is